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Topic C05: Process of Developing a Business Plan Topic Overview p. 1
BAFS Learning and Teaching Example As at April 2009
Learning Objectives: 1. To understand the importance of business planning; 2. To understand the process of developing a business plan; and 3. To develop a basic business plan for a SME. Overview of Contents: Lesson 1 Business Planning and Setting Objectives Lesson 2 Developing a Business Plan (Part I) Lesson 3 Developing a Business Plan (Part II) Resources:
Topic Overview and Teaching Plan PowerPoint Presentation Student Worksheet with Answer
Suggested Activity:
Case Study
Topic Overview Topic BAFS Compulsory Part - Introduction to Management
C05: SMEs Management Process of Developing a Business Plan Level S4 Duration 3 lessons (40 minutes per lesson)
Topic C05: Process of Developing a Business Plan Topic Overview p. 2
BAFS Learning and Teaching Example As at April 2009
Lesson 1 Theme Business Planning and Objectives Setting Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Discuss the needs and importance of business planning; 2. Explain the process of developing a business plan; 3. Set objectives for a business plan; and 4. Define the mission and goals of a business. Teaching Sequence and Time Allocation:
Activities Reference Time
AllocationPart I: Introduction
Teacher introduces the lesson by describing the background of case of Uncle Bills Caf. PPT #2 3 minutes
Part II: Content
Activity 1 Case Study (Part I) Put students into groups of four to five and
identify the criteria Uncle Bill should consider in the set up of his business.
Teacher invites students to share their answers. Teacher discusses the importance of a business
plan. Teacher concludes the case study Part I by
discussing the answers with students. Summarise the six steps of a business plan
development.
PPT#3
Student Worksheet
pp.1-2
PPT#4-5
15 minutes
Teacher introduces the first step of business planning, i.e. setting objectives.
Teacher defines mission and explain the process of creating a mission statement.
Teacher displays sample mission statements of some well-known companies.
Teacher further explains what goals are and the process
PPT#6-13
20 minutes
Topic C05: Process of Developing a Business Plan Topic Overview p. 3
BAFS Learning and Teaching Example As at April 2009
of goals setting. Activity 2 Case Study (Part II)
Students are required to read the case of Uncle Bills Caf Part II and determine the mission and goals of Uncle Bills Caf.
Teacher invites students to present their answers.
PPT#14
Student
Worksheet pp.3-4
Part III: Conclusion Teacher consolidates the discussion and highlights the
key concepts covered. 3 minutes
Topic C05: Process of Developing a Business Plan Topic Overview p. 4
BAFS Learning and Teaching Example As at April 2009
Lesson 2 Theme Developing a Business Plan (Part I) Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Explain the need of understanding the market during a business plan
development; 2. Discuss concerns related to customers, products, market structure and
competition in the market; and 3. Describe elements to be considered when deciding selling strategies. Teaching Sequence and Time Allocation:
Activities Reference Time
AllocationPart I: Introduction
Teacher reviews what was taught in the previous lesson. 3 minutes
Part II: Content Teacher introduces the second step of business
planning, i.e. understanding the market. Teacher further explains the information and data
needed for market research. Activity 3 Case Study (Part III)
Students remain in their groups formed in the previous lesson. Have them read the case of Uncle Bills Caf Part III and answer the questions.
Teacher invites students to present their answers.
PPT#15
PPT#16 Student
Worksheet pp.5-11
17 minutes
Teacher introduces the third step of business planning, i.e. deciding selling strategy.
Teacher further explains different elements, i.e. the 4 Ps, related to selling strategy.
Activity 4 Case Study (Part IV) Students are required to read the case of Uncle
Bills Caf Part IV and answer the questions. Students are invited to present their answers.
PPT#17
PPT#18 Student
Worksheet pp.12-16
17 minutes
Topic C05: Process of Developing a Business Plan Topic Overview p. 5
BAFS Learning and Teaching Example As at April 2009
Part III: Conclusion Teacher concludes the session by reviewing the major
steps of a business plan development. 3 minutes
Topic C05: Process of Developing a Business Plan Topic Overview p. 6
BAFS Learning and Teaching Example As at April 2009
Lesson 3 Theme Developing a Business Plan (Part II) Duration 40 minutes Expected Learning Outcomes: Upon completion of this lesson, students will be able to: 1. Describe the issues related to organise a business; 2. Describe the issues related to financial projection; and 3. Draw up an implementation schedule for a business plan. Teaching Sequence and Time Allocation:
Activities Reference Time
AllocationPart I: Introduction
Teacher reviews what students learned in previous lessons. 3 minutes
Part II: Content Teacher introduces the fourth step of business planning,
i.e. organising the business. Activity 5 Case Study (Part V)
Students remain in their groups formed in last lesson. They are required to read the case of Uncle Bills Caf Part V and answer the questions.
Teacher invites students to present their answers.
PPT#19
PPT#20-21 Student
Worksheet pp.17-18
12 minutes
Teacher introduces the fifth step of business planning, i.e. making financial projections.
Activity 6 Case Study (Part VI) Students are required to read the case of Uncle
Bills Caf Part VI and make projections on revenues and expenses of Uncle Bills Caf.
Teacher invites students to present their answers.
PPT#22
PPT#23-25 Student
Worksheet pp.19-21
15 minutes
Teacher explains the sixth step of developing a business plan, i.e. taking action.
Activity 7 Case Study (Part VII) Students are required to read the case of Uncle
Bills Caf Part VII, list out the major tasks of
PPT#26
PPT#27 Student
Worksheet
7 minutes
Topic C05: Process of Developing a Business Plan Topic Overview p. 7
BAFS Learning and Teaching Example As at April 2009
setting up Uncle Bills Caf and draw up an implementation schedule.
Teacher invites students to present their answers.
pp.22-23
Part III: Conclusion Teacher concludes the session by reviewing the whole
process of developing a business plan. PPT#28 3 minutes
1
1
BAFS Compulsory PartIntroduction to Management
Topic C05: SMEs Management- Process of Developing a BusinessPlan
Technology Education SectionCurriculum Development Institute
Education Bureau, HKSARGApril 2009
IntroductionThis session aims to introduce students to the process of a business plan development. Students will understand the different steps of developing a business plan.
DurationThree 40-minute lessons.
ContentsLesson 1 Business Planning and Setting ObjectivesLesson 2 Developing a Business Plan (Part I)Lesson 3 Developing a Business Plan (Part II)
2
BAFS Compulsory PartLearning and Teaching Example2
Topic C05Process of Developing a Business Plan
Activity 1: Case Study (Part I)
Uncle Bill has just returned to Hong Kong from Australia and is planning to open a Cha Chaan Teng.
He needs your advice!
Lesson 1
Activity 1 :
Start the lesson by describing the background of case of Uncle Bills Caf.Refer to Student Worksheet p.1 and explain to the class the background of the case. Uncle Bill has just returned to Hong Kong after living in Australia for 12 years. He was a chef at a Chinese restaurant in Melbourne. Uncle Bill is planning to open a Hong Kong style caf, called Cha Chaan Teng (). Being away from Hong Kong for 12 years, Uncle Bill is not so familiar with the local fast food industry. He seeks your advice for setting up his business.
3
BAFS Compulsory PartLearning and Teaching Example3
Topic C05Process of Developing a Business Plan
Activity 1: Case Study (Part I)
What are the key factors Uncle Bill should consider in setting up his business?
Ask the class to form groups of four to five and discuss among themselves what important issues Uncle Bill should think about in setting up his cafe. Ask students to write down their answers on Student Worksheet p.2. Invite students to present their answers.
4
BAFS Compulsory PartLearning and Teaching Example4
Topic C05Process of Developing a Business Plan
The Importance of Having a Business Plan
If you fail to plan, you plan to fail!
Introduce the concept of business plan with the idiom: If you fail to plan, you plan to fail and explain to the class that the importance of having a business plan includes the following:
A business plan is a roadmap for entrepreneurs to start a new business or to expand an existing business;
A business plan is a thinking process which helps entrepreneurs to understand the market condition, their strengths and weaknesses, to formulate suitable tactics and strategies for their business and improve their chance of success; and
A business plan is required if an entrepreneur wants to raise capital or borrow money.
5
BAFS Compulsory PartLearning and Teaching Example5
Topic C05Process of Developing a Business Plan
Process of Developing a Business Plan
SetSetObjectivesObjectives
UnderstandUnderstandthe Marketthe Market
IdentifyIdentifySellingSelling
StrategyStrategy
OrganiseOrganisethe structurethe structure
MakeMakeFinancialFinancialProjectionProjection
Take ActionTake Action
Based on the discussion from Case Study Part I, outline the process of developing a business plan:
Set objectives What does Uncle Bill expect his business to achieve? For example, for self employment, profit making, customer satisfaction, etc.
Understand the market What is the market condition? Who are the competitors? Are their products different from ours?
Determine selling strategies What are we selling? What should the selling price be? Who are the target customers? How should we sell our products or services?
Organise the business In what form will the business be set up? How many employees are needed? What are the recruitment requirements? Who will the manage the business?
Make financial projection Where does the capital come from? What are the estimated revenues? What is the food cost? What is the expected profit?
Take action Set an agenda for the implementation of the business plan.
6
BAFS Compulsory PartLearning and Teaching Example6
Topic C05Process of Developing a Business Plan
Step 1: Setting Objectives
What is the purpose of starting a business?People have different motivations:
Self employmentFinancial reward / making profitsPersonal satisfactionCustomer satisfactionInnovation
The first step in developing a business plan is to set the objectives of the business. Teacher may ask students these questions:
What is the purpose of starting a business? What does the owner want to achieve?
Explore what motivate people to run their own business. Possiblemotivations are:
Some people rather work for themselves than other; Some people hope to increase their income by running their own
business; Some people gain personal satisfaction on setting up a business; Some people want to satisfy others with their products or services;
and Some people may have creative ideas and want to introduce them to
the public.Ask the class to come up with more motivations.
7
BAFS Compulsory PartLearning and Teaching Example7
Topic C05Process of Developing a Business Plan
Step 1: Setting Objectives
Define the mission of the business.Mission is what a business does in relation to its customers, products and the benefits to its customers.Companies often use a Mission Statement to define their goal in the long run.
Explain to the class that a business sets its objectives through formulating its mission and goals. A companys mission has to show what a company does for its customers so the customers will purchase its products or services in return.Examples of mission:
The mission of an English language tutor is to help students learn English in an effective way.
The mission of a car repair shop is to provide efficient and reliable services for car owners.
8
BAFS Compulsory PartLearning and Teaching Example8
Topic C05Process of Developing a Business Plan
Sample of Mission StatementOcean Park provides all their guests with memorable experiences that combine entertainment and education, while inspiring life long learning and conservation involvement. Our aim is to maintain a healthy financial status, while offering the guests a diverse range of activities at competitive prices. Ocean Park exists for the publics benefit and strives to deliver the highest standards of safety, animal care, products and guest service.(Source: http://www.oceanpark.com.hk)
Show the class the mission statement of Ocean Park and discuss itscontent.
Suggested discussion points: What does Ocean Park commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Ocean Parks customers,
products (or service) and the benefits to its customers?
9
BAFS Compulsory PartLearning and Teaching Example9
Topic C05Process of Developing a Business Plan
Sample Mission Statement
7-Eleven store focuses on meeting the needs of busy shoppers by providing a broad selection of fresh, high-quality products and services at everyday fair prices, along with speedy transactions and a clean, safe, friendly shopping environment.(Source: http://www.7-eleven.com)
Show the class the mission statement of 7-Eleven and discuss its content. Suggested discussion points: What does 7-Eleven commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to 7-Elevens customers,
products (or service) and the benefits to its customers?
10
BAFS Compulsory PartLearning and Teaching Example10
Topic C05Process of Developing a Business Plan
Sample Mission Statements
Coca-Cola Company:To Refresh the World...in body, mind, and spirit. To Inspire Moments of Optimism...through our brands and our actions.
To Create Value and Make a Difference...everywhere we engage.(Source: http://www.thecoca-colacompany.com)
Show the class the mission statement of Coca-Cola and discuss its content.Suggested discussion points: What does Coca-Cola commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Coca-Colas customers,
products (or service) and the benefits to its customers?
11
BAFS Compulsory PartLearning and Teaching Example11
Topic C05Process of Developing a Business Plan
Sample Mission Statements
Virgin Atlantic:Mission 1: To grow a profitable airline...
Mission 2: Where people love to fly...Mission 3: Where people love to work
(Source: http://www.virgin-atlantic.com)
Show the class the mission statement of Virgin Atlantic and discuss its content. Suggested discussion points:
What does Virgin Atlantic commit to doing for its customers? Is the mission statement specific enough for employees to follow? How does this mission statement address to Virgin Atlantics
customers, products (or service) and the benefits to its customers?
12
BAFS Compulsory PartLearning and Teaching Example12
Topic C05Process of Developing a Business Plan
Sample Mission Statement
Walt Disney: To make people happy!(Source: Aaker, D.A., Strategic Market Management, 7th edition, p.29, John Wiley & Sons, Inc., 2005)
Giordano: To make people feel good and look great.(Source: http://www.giordano.com.hk)
Show the class the mission statements of other popular companies and discuss their contents as above. Ask the class: As a customer, what do they think about these mission statements?Have students find more sample mission statements of companies they are familiar with and share with classmates.
13
BAFS Compulsory PartLearning and Teaching Example13
Topic C05Process of Developing a Business Plan
Goals Setting
Define the goals of the business.Goals are specific performance targets that a company wants to achieve in short term.Such goals should be consistent with the companys mission.
The goals of a business are specific performance targets that a company wants to achieve in short term, say, within a few months to a couple of years. Such goals should be consistent with the companys mission.Examples of goals:
To double the sales within 2 years. To increase the gross profit margin by 10%. To expand to the Taiwan market in the next 12 months. To launch the new product before Christmas.
Ask students to suggest some goals of a business.
14
BAFS Compulsory PartLearning and Teaching Example14
Topic C05Process of Developing a Business Plan
Activity 2: Case Study (Part II)
Referring to Uncle Bills case, lets move on to step one setting objectives.Please define the goals and create a mission statement.
Activity 2 :
Ask students to set goals and come up with a mission statement for Uncle Bills Caf. Suggested mission statements for Uncle Bills Caf:
To provide tasty and healthy fast meals in a clean environment at a reasonable price;
To give customers a new food experience by providing specialty meals;
To satisfy customers needs by providing home-made style meals; and
To serve economical and healthy fast food. Suggested goals for Uncle Bills Caf:
To start serving late night supper in three months; To achieve a monthly revenue of $150,000 in six months; To increase the business volume by 30% in the second year; To breakeven after the first year of operation; and To recover the initial investment in the third year of operation.
Ask students to share their ideas in class.
End of Lesson 1
15
BAFS Compulsory PartLearning and Teaching Example15
Topic C05Process of Developing a Business Plan
Step 2: Understanding the Market
Identify market condition related toCustomersProductsMarket structureCompetition
Lesson 2
Teacher starts by reviewing the steps of developing a business plan and then explain the second step of business planning, i.e. understanding the market. Based on the four items, i.e. customers, products, market structure and competition, teacher explains to the class that the following questions needed to be considered in this stage:
Who are the potential customers? What are the characteristics of the potential customers? Are there any competitors in the market ? If so, who are they? Is there any company dominating the market? Are the competitors products different from ours? If yes, in what
aspects? What is the degree of competition in the market?
16
BAFS Compulsory PartLearning and Teaching Example16
Topic C05Process of Developing a Business Plan
Activity 3: Case Study (Part III)
Read the case carefully and answer the questions.
Activity 3 :
Ask students to remain in their groups formed in the last lesson and read the case of Uncle Bills Caf Part III, then answer the questions.Suggested answers to the questions:
1. Students and workers from the neighborhood; and residents in the area.
2. Fast food chains, Burger joints, noodle shops, convenience stores, and Chinese restaurants are direct competitors. The Western caf is less direct.
3. Uncle Bill plans to offer typical Cha Chaan Teng foods. 4. Uncle Bill should set prices that are competitive, i.e. close to average
or a bit lower, within the area.5. Uncle Bill distribute flyers or cash coupons to pedestrians on the
street, nearby schools, office buildings, and residence.
17
BAFS Compulsory PartLearning and Teaching Example17
Topic C05Process of Developing a Business Plan
Step 3:Deciding Selling StrategyBased on results of the survey, decide
What Uncle Bill should sell.What the prices range is.What the promotional strategies are.What channels should be used for product selling.
The third step of developing a business plan is to make decision on issues related to sales and marketing strategies. The 4 Ps, i.e. Product, Price, Promotion and Place, framework may be used. Product
What products should Uncle Bill sell? How do we differentiate his products from the competitors? How can the products satisfy customers needs and wants?
Price How should the prices be determined in order to maintain
competitiveness ? Should he set lower prices for a higher sale or higher prices for a
larger profit margin?Promotion
How should he inform potential customers about the products? How should he attract new customers? How should he enhance the desirability of the products?
Place How should he deliver the products into the customers hands? What is the best distribution channel?
18
BAFS Compulsory PartLearning and Teaching Example18
Topic C05Process of Developing a Business Plan
Activity 4: Case Study (Part IV)
Read the case carefully and answer the questions.
Activity 4 :
Have students read the case of Uncle Bills Caf Part IV and answer the questions. Suggested answers to the questions:
1. Uncle Bill adds Australian style coffee and Chinese soups to his cafs menu to differentiate his caf from others.
2. Uncle Bill sets average prices for breakfast and lunch but sets a higher price for dinner set menus that come with Chinese soups.
3. Uncle Bill plans to promote his new caf by offering tea set coupons for spending that exceeds $100.
4. Uncle Bill plans to increase sales by offering take-away and free delivery service to nearby schools, offices and residence.
5. Other reasonable suggestions are also acceptable. Students are encouraged to suggest innovative and unconventional ideas.
Invite students to present their answers.
End of Lesson 2
19
BAFS Compulsory PartLearning and Teaching Example19
Topic C05Process of Developing a Business Plan
Step 4:Organising the Structure
Legal form of the businessOrganisational structureManagement
Lesson 3
Teacher explains different issues to be considered when organising the structure:Legal formThe first question concerns the legal form of the company. Normally, SMEsstart in the form of sole proprietorship or partnership. Followed by the growth of the business, they then transform into corporations. Organisational structureAnother important issue is manpower planning determine recruitment guidelines such as salary, benefits, training, motivation etc.ManagementWho will be responsible for managing the operation of the business?
20
BAFS Compulsory PartLearning and Teaching Example20
Topic C05Process of Developing a Business Plan
Activity 5: Case Study (Part V)
Read the case carefully and determine the manpower requirements of Uncle Bills caf.Estimate their salaries.
Activity 5 :
Students read the case of Uncle Bills Caf Part V, answer the questions and complete the table. Invite students to present their answers.
Suggested answers:Uncle Bill may set up his caf in the form of sole proprietorship which is simple, fast and less expensive.The job needed to be done is:
1. Purchasing and sourcing2. Preparing foods and drinks3. Controlling of cash flow 4. Staffing5. Providing take-away services and6. Cleaning
21
BAFS Compulsory PartLearning and Teaching Example21
Topic C05Process of Developing a Business Plan
Activity 5: Case Study (Part V)
39,5007Total
5,5001Waiter/waitress (full time)
4,0001Cleaners
2 x 3,0002Waiters /waitresses (part-time)
8,0001Assistant chef & bartender
6,0001Cashier/waitress (Auntie May)
10,0001Sou Chef (Uncle Bill)
Estimated monthly salary ($)
Number requiredPosts
Suggested manpower requirements of Uncle Bills caf: A Sou Chef (Uncle Bill) and manager drawing a salary of $10,000; A cashier/waitress (Auntie May) drawing a salary of $6,000; An assistant chef to prepare foods and drinks with an estimated salary
of $8,000; A full-time waiter or waitress with an estimated salary of $5,500; A part-time waiter or waitress during peak hours, i.e. breakfast and
lunch time with an estimated salary of $3,000; A part-time waiter or waitress for delivery with an estimated salary of
$3,000; and A cleaner with an estimated salary of $4,000.
Other reasonable answers are also acceptable.
22
BAFS Compulsory PartLearning and Teaching Example22
Topic C05Process of Developing a Business Plan
Step 5:Making Financial Projection
Estimation of revenues, expenses and cash flows.Dont be too optimistic on the projection of sales, revenues and cash inflows.Solvency is crucial to the survival of a business.Keep petty cash for emergency.
The fifth step in developing a business plan is to make financial projection. Teacher asks students the below questions:
Where is the capital from? What is the estimated gross revenue? What is the food cost? What is the estimated profit?
Financial projection involves fund raising, estimation of revenues, expenses, cash flows and all other matters related to money. Estimation of revenues is the hardest part in business planning. Without going into details, I would like to highlight the fact that business owners are usually too optimistic towards the forecast of sales, revenues and cash inflows of a new business. Therefore, a more conservative projection is recommended. Moreover, solvency is crucial to the survival of a company. So keeping some extra cash for emergency is required during the process of budgeting.
23
BAFS Compulsory PartLearning and Teaching Example23
Topic C05Process of Developing a Business Plan
Activity 6: Case Study (Part VI)
Read the case carefully and project annual revenues and expenses of Uncle Bills caf.
Activity 6 :
Ask students to read Part VI of the case of Uncle Bills Caf and complete the financial projections for the new caf. Invite students to present their answers.See suggested answers in the following slides.
24
BAFS Compulsory PartLearning and Teaching Example24
Topic C05Process of Developing a Business Plan
Activity 6: Case Study (Part VI)
Total annual revenue = $4,525 x 360 = $1,629,0004,525Total revenue per day
7502530Take away & delivery1,2253535Dinner
4501530Afternoon tea1,2002060Lunch
9001560Breakfast
Total revenue
($)
Value per transaction
($)
No. of transactionsItems
Suggested answer for revenues projection. Other reasonable answers are also acceptable.
25
BAFS Compulsory PartLearning and Teaching Example25
Topic C05Process of Developing a Business Plan
Activity 6: Case Study (Part VI)
1,608,700Total expenses per year
36,000Miscellaneous
48,000Insurance
120,000Utilities
520,000Salaries, bonus and MPF
396,000Rent and management fees
488,700Food supplies
Projected annual amount ($)Items
Suggested answer for expenses projection.Based on the projected annual revenue of $1,629,000 (see last slide), Uncle Bill is expected to make a net income of $20,300 in the first year.Extended discussion:Suppose Uncle Bills goal is to recover the initial investment of $520,000 in the third year of operation (see suggested goals on PPT#19), and assume:
Uncle Bill wants to recover about 1/3 of the initial investment in the second year;
Operation costs will increase by 5% in the second year;Ask students to make a financial projection for the second year.Suggested answer:Projected total expenses for the second year are $1,608,700 x 1.05 = $1,689,135; Recovery of 1/3 of the initial investment in the second year is $520,000 x 1/3 = $173,333;Total revenue required to meet the goals is $1,862,468, i.e. 14.33% growth in revenues from the first year.
26
BAFS Compulsory PartLearning and Teaching Example26
Topic C05Process of Developing a Business Plan
Step 6: Taking Action
List the tasks required to be done Create an agenda for the tasksExpect the unexpectedHave a contingency plan
Explain to the class that the final step of business planning is to create an agenda to implement the business plan.Firstly, make a list of all the tasks required to be done.Secondly, estimate how much time is required to complete these tasks.However, during the implementation of a business plan, unexpected things could happen, e.g. delay in the decoration of premises, problems in satisfying licensing requirements, inability to recruit enough staff or the right staff, change in market condition such as a new competitor, etc.Business owners should always take such possible problems into consideration and make plans for alternatives, it is so-called Plan B.
27
BAFS Compulsory PartLearning and Teaching Example27
Topic C05Process of Developing a Business Plan
Activity 7: Case Study (Part VII)
Make a list of the major tasks to be done and time required before the opening of Uncle Bills new caf.Create an agenda for the tasks.
Activity 7 :
Ask students to make a list of the major tasks to start up a cha chaan tengand estimate the time needed to complete the tasks. Complete theschedule on Student Worksheet p.23. Major tasks include:
Searching for/renting the premises (Uncle Bill has selected a suitable shop premises);
Application for business registration and other licences (2 months); Renovation arrangement with contractors (1 month); Renovation (1 month); Purchase and installation of equipments, food wares, furniture, fixtures,
electrical appliances, etc. (2 months); Staff recruitment and training (1 month); Securing suppliers (1 month); Soft opening(1 week).
Invite students to present their answers.
28
BAFS Compulsory PartLearning and Teaching Example28
Topic C05Process of Developing a Business Plan
The End
Conclude the session by reviewing the steps in developing a business plan (teacher may go back to PPT#5).
End of Lesson 3
Topic C05: Process of Developing a Business Plan Student Worksheet p.1
BAFS Learning and Teaching Example As at April 2009
BAFS Compulsory Part - Introduction to Management Topic C05: SMEs Management Process of Developing a Business Plan Activity 1: Case Study (Part I) What is in a Business Plan? Form groups of four or five. Read the following case carefully and discuss the questions.
Uncle Bill has just returned to Hong Kong recently after immigrated to Australia for 12 years. He was a chef in a Chinese restaurant in Melbourne. Uncle Bill plans to open a Hong Kong style caf, so called Cho Chaan Teng (hereafter referred to as Uncle Bills Caf). Being away from Hong Kong for 12 years, Uncle Bill is not completely familiar with the local fast food industry. He now seeks your advice for a business plan development. First of all, he would like to know what his considerations are in developing his business plan.
Topic C05: Process of Developing a Business Plan Student Worksheet p.2
BAFS Learning and Teaching Example As at April 2009
Brainstorm ideas about Uncle Bills consideration in developing his business plan. (Hints: Assume that you want to start a small business to sell snacks at school, what kinds of questions would you ask yourself? Suggested questions include, What is my purpose?, What types of snacks should I sell?, What should the price range be? and Is there anyone else selling snacks at school?, etc.) _______________________________________________________ _______________________________________________________
_______________________________________________________ _______________________________________________________
_______________________________________________________ _______________________________________________________
_______________________________________________________
_______________________________________________________ _______________________________________________________
_______________________________________________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.3
BAFS Learning and Teaching Example As at April 2009
Activity 2: Case Study (Part II) Setting Objectives Read the case carefully and help Uncle Bill determine the mission and goals of his new cafe.
After discussing with you, Uncle Bill understands that the process of business planning should involve the following major steps:
1. Setting objectives; 2. Understanding the market; 3. Deciding selling strategy; 4. Organising the business; 5. Making financial projections; and 6. Taking action.
Now Uncle Bill wants to move on to the first step - setting objectives.
Uncle Bill understands that people are more health conscious nowadays. He wants to serve healthy, nutritious and tasty meals to customers in a hygienic environment at a reasonable price.
He aims for a break-even in the first year, i.e. revenues equal expenses. He also wants to recover his initial investment in the following two years.
Topic C05: Process of Developing a Business Plan Student Worksheet p.4
BAFS Learning and Teaching Example As at April 2009
Please help Uncle Bill draft the mission statement and set goals for his caf.
Mission of Uncle Bills Caf
__________________________________________ __________________________________________ __________________________________________
Goals of Uncle Bills Cafe
Topic C05: Process of Developing a Business Plan Student Worksheet p.5
BAFS Learning and Teaching Example As at April 2009
Activity 3: Case Study (Part III) Understanding the Market Read the case carefully and answer the questions.
After setting the mission and goals of his caf, Uncle Bill continued to plan his new business. He found a vacant premise in the area near your school that meets the requirements of cha chaan teng business, so he carried out a survey in that area (see map below) in order to further develop his business plan.
School
Burger shop Con
veni
ence
st
ore
ChineseRestaurant
Fast foodchain
WesternCaf
Noo
dle
shop
UncleBillsCafe
Scho
ol
OfficeBuilding
OfficeBuilding
Office &Residential Buildings
Office & Residential Buildings
ResidentialBuildings
Topic C05: Process of Developing a Business Plan Student Worksheet p.6
BAFS Learning and Teaching Example As at April 2009
These eateries mainly serve people who live, study or work in the area. Those places are usually very busy during breakfast and lunch time. It is less busy in the evening after office hours. Dinner customers are mainly residents from the neighborhood. Uncle Bill obtained the following observations after visiting the different eating places in the area:
Fast food
Chain
The most crowded restaurant in the area frequented by all sorts of customers including residents, workers and students
Target customers are the middle to lower income earners
Prices are inexpensive Foods are greasy and unhealthy Self-served and hygienic
Burger Joint
Ranks second in terms of business volume Targets to younger customers Prices are inexpensive Serves mainly high calorie junk food Self-served and hygienic
Noodle Shop
Many students like to have lunch at the noodle shop
Noodle in soup is $15 a bowl Run down and unhygienic environment
Topic C05: Process of Developing a Business Plan Student Worksheet p.7
BAFS Learning and Teaching Example As at April 2009
Convenience Store
Some students and workers prefer to have a quick breakfast or lunch here
Serves snacks and refreshments They offer take-away service here
Chinese Restaurant
Relatively more expensive than other eateries
Serves traditional Chinese cuisine Diners come in large groups Customers come from other areas
Western
Caf
High end expensive restaurant Serves Western dishes The least crowded place
Topic C05: Process of Developing a Business Plan Student Worksheet p.8
BAFS Learning and Teaching Example As at April 2009
Uncle Bill has interviewed a few people during breakfast, lunch and dinner time. Here are some of their responses:
Clerk
Students
Young couple living in the area
Id like to see more selections of restaurant in this area. I am tired of eating at the same restaurants. I like cha chaan teng food.
We want inexpensive, fast and tasty foods. Our lunch break is rather short. It will be great if we can order take-out.
We seldom cook at home. We like Chinese soup. Home-made Chinese food is our favorite. We dont mind paying a little bit more for healthy and good foods.
Topic C05: Process of Developing a Business Plan Student Worksheet p.9
BAFS Learning and Teaching Example As at April 2009
Office lady
Uncle Bill believes that there is a high demand of a new cha chaan teng in this area.
I usually have breakfast and lunch near my office. However, the food is too heavy and oily. I like something that is lighter; like a lot of veggies.
Topic C05: Process of Developing a Business Plan Student Worksheet p.10
BAFS Learning and Teaching Example As at April 2009
Discussion Questions 1. Who are the potential customers for Uncle Bills Caf?
____________________________________________________ ____________________________________________________ ____________________________________________________
2. Who are the direct competitors of Uncle Bills Caf?
____________________________________________________ ____________________________________________________ ____________________________________________________
3. What kind of food does Uncle Bill plan to offer? Do you have any
suggestions?
____________________________________________________ ____________________________________________________ ____________________________________________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.11
BAFS Learning and Teaching Example As at April 2009
4. According to your opinion, what should Uncle Bills price range be?
____________________________________________________ ____________________________________________________ ____________________________________________________
5. How should Uncle Bill promote his new cha chaan teng?
____________________________________________________ ____________________________________________________ ____________________________________________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.12
BAFS Learning and Teaching Example As at April 2009
Activity 4: Case Study (Part IV) Deciding Selling Strategy Read the case carefully and answer the questions.
Having a good understanding about the market, Uncle Bill decides the following issues:
Students of nearby schools Workers of nearby offices Residents in the area Middle to lower income group
The direct competitors are the fast food chain, Burger
Joint and noodle shop Less direct competitors are the convenience store and
Chinese restaurant The Western caf targeting higher end customers is not an
important competitor
Topic C05: Process of Developing a Business Plan Student Worksheet p.13
BAFS Learning and Teaching Example As at April 2009
Typical cha chaan teng foods Combos with traditional Chinese dishes and soups at a
reasonable price Specialty Chinese soup Healthy menus and mini-menus: Low-fat dishes with plenty of
vegetables in smaller portion
The prices of breakfast and lunch set meals are similar to
those of the fast food chain Higher prices for dinner menu compared to the fast food
chain Lower prices for dinner menu compared to the Chinese
restaurant
Topic C05: Process of Developing a Business Plan Student Worksheet p.14
BAFS Learning and Teaching Example As at April 2009
During the first three months of operation, offer tea set coupon for spending over $100
10% discount for paying more than $200 in order to attract customers to come in groups
Daily special: one popular dish is priced at 30% off the regular price everyday
Distribute promotion leaflets in the area
Aims to increase revenue Offer free delivery services to nearby schools, offices and
residence
Topic C05: Process of Developing a Business Plan Student Worksheet p.15
BAFS Learning and Teaching Example As at April 2009
Discussion Questions 1. How does Uncle Bill plan to differentiate his meals from the other
restaurants?
____________________________________________________ ____________________________________________________ ____________________________________________________
2. What is Uncle Bills pricing strategy?
____________________________________________________ ____________________________________________________ ____________________________________________________
3. How should Uncle Bill promote his new caf?
____________________________________________________ ____________________________________________________ ____________________________________________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.16
BAFS Learning and Teaching Example As at April 2009
4. How does Uncle Bill increase the revenue of his caf?
____________________________________________________ ____________________________________________________ ____________________________________________________
5. Do you have any further suggestions for Uncle Bill?
____________________________________________________ ____________________________________________________ ____________________________________________________
____________________________________________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.17
BAFS Learning and Teaching Example As at April 2009
Activity 5: Case Study (Part V) Organising the Business
Uncle Bill is convinced that this will be a successful venture. What form of business do you suggest to use? Give your reasons. _________________________________________________ _________________________________________________ Uncle Bills new caf can accommodate 30 persons. He will be the chef and manager of the caf. His wife, Auntie May, will be the cashier and waitress. Advise Uncle Bill what the roles of other employees are. What are the tasks needed to be done in a cha chaan teng? 1. ______________________ 2. ______________________ 3. ______________________ 4. ______________________ 5. ______________________ 6. ______________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.18
BAFS Learning and Teaching Example As at April 2009
Name the positions, estimate the salaries and complete the following table:
Posts No. required
Estimated Monthly Salary including MPF
($) Cook (Uncle Bill) 1 10,000 Cashier/waitress (Auntie May) 1 6,000
Topic C05: Process of Developing a Business Plan Student Worksheet p.19
BAFS Learning and Teaching Example As at April 2009
Activity 6: Case Study (Part VI) Making Financial Projections
Uncle Bill has made the following projection on the initial investment required for his new caf: A. Projection of initial investment:
Items Projected amount ($)
Decorations 200,000 Cooking equipments and utensils 120,000 Furniture and fixtures 50,000 Electrical appliances 30,000 Rental and utilities deposits 100,000 Others 20,000 Total 520,000
B. Projection of Revenues: Next, Uncle Bill has to project the revenues and expenses for his new caf. Estimate the number of meals Uncle Bills caf will be able to sell and the average revenue per meal per day:
Breakfast: _______ x $______ = $________
Topic C05: Process of Developing a Business Plan Student Worksheet p.20
BAFS Learning and Teaching Example As at April 2009
Lunch: _______ x $______ = $________
Afternoon tea: _______ x $______ = $______
Dinner: _______ x $______ = $________
Take-away & Delivery: _______ x $______
= $________
Items No. of
transactions
Value per transaction
($)
Total revenue ($)
Breakfast Lunch Afternoon Tea Dinner Take-away & Delivery
Total revenues per day Assume Uncle Bills caf will open for 360 days a year, the projected annual revenues
= _______________ x 360 = ______________
Topic C05: Process of Developing a Business Plan Student Worksheet p.21
BAFS Learning and Teaching Example As at April 2009
C. Projection of Expenses: Complete the following table assuming: 1. Food cost is 30% of the revenues; 2. Rent, rate and management fee are $33,000 per month; 3. Salaries, bonus and MPF are $45,000 per month; 4. Utilities expenses are $10,000 per month; 5. Insurance is $4,000 per month; and 6. Miscellaneous expense adds $3,000 a month.
Items Projected annual
amount ($) Food supplies Rent, rates and management fees Salaries, bonus and MPF Utilities Insurance Miscellaneous Total expenses per year
Projected net income = Revenue expenses = __________________
Topic C05: Process of Developing a Business Plan Student Worksheet p.22
BAFS Learning and Teaching Example As at April 2009
Activity 7: Case Study (Part VII) Taking Action
Now Uncle Bill has gone through the important steps of his business plan for setting up a cha chaan teng. He is now going to create a schedule for implementing his plan. What are the major tasks required to be done and the time needed before the grand opening of Uncle Bills new caf? 1. ______________________________________________ 2. ______________________________________________ 3. ______________________________________________ 4. ______________________________________________ 5. ______________________________________________ 6. ______________________________________________ 7. ______________________________________________ 8. ______________________________________________ 9. ______________________________________________
Complete the work schedule chart for Uncle Bills Caf on the next page.
Topic C05: Process of Developing a Business Plan Student Worksheet p.23
BAFS Learning and Teaching Example As at April 2009
Uncle Bills Caf Work Schedule
Tasks
Lease shop premises Find contractor Renovation
Today Month 1 Month 2 Month 3